Developing Your Own Trading Style & Rule Book

A Reminder

Something that I mentioned in a recent post is the fact that many of the top analysts have been wrong more than they have been correct. This is why I made special note of the fact that my analysis is independent. Not only is it independent but also something that I do on a daily basis. I look for opportunities in the charts and then wait for confirmation. Trading just for the sake of trading is a very bad idea. You need to trade set-ups that have confluence and a high chance of success. Trading is a game of probabilities and the only rules that exist are the probabilities. Successful traders are basing their actions upon these probabilities as they see them begin to form and mature in the price action.

It’s Gambling

Trading outside of probable set-ups and analysis is nothing short of gambling. If you can’t explain why you opened a position, I can, it’s gambling! Opening a position without any data, analysis, or confluence to back it up is purely emotional. A good strategy also has rescue measures and ways to counter unexpected moves. If a trade goes against you, what are you going to do? This was one of the most important “secrets” I figured out after years of trading. There are a few strategic approaches that you won’t find anyone teaching. Once I learned how to execute these mathematically proportioned moves my success rate improved significantly.

Strong Discipline

I don’t mind missing a “move” and if you are trading according to disciplines you will miss moves in the price action. You will be trading according to what the charts and other metrics are telling you. Sometimes price action is sneaky and moves before “communicating the intention”. A good trader will ignore this move and wait for a move that meets the criteria. Sometimes noobs catch these “random” moves but it’s just luck, which is random and scarce. The disciplined trader knows that there will be plenty more opportunities. These opportunities are however not random or scarce but continuous and predictable.

Confluence Outside Of Technical Analysis

In an older post, I explained how utilizing emotional intelligence can be a highly effective indicator. When you find confluence beginning to form in other discernable metrics, including human behavior, you should really pay attention. Confluence is a powerful dynamic and a key ingredient to successful trading. Developing your own strategies and metric checklists is something that develops over time. I have found truly successful traders all have something in common. They dedicate hours to chart research and have spent a lot of time gaining experience in the art of accurately interpreting pattern formations.

Don’t Interpret Initial Losses As A Sign To Give Up

Many experience significant losses when they begin trading but this is usually solely due to the fact that they have zero experience and very little knowledge. Funny how people think they can succeed because the activity involves “making money”. The allure of wealth is deceptive beyond measure. Every successful trader will have plenty of stories of how they got rekt in their early trading experiences. Even if you go on to become a highly effective trader you are not going to get there without casualty. Everyone has to pay their “school fees”. Don’t let initial challenges deter you. Learn more, practice more, and be teachable. Having the correct mindset is always half the battle when it comes to any challenge or learning experience.

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